The demand for residential property to let in various conveniently situated hubs around KwaZulu-Natal continues unabated, particularly among younger, career-minded buyers who may not yet have access to sufficient capital and credit in order to put down a deposit and acquire their own homes.
Says Carol Reynolds, Pam Golding Properties area principal for Durban Coastal: “As a result, while generally the rental market is experiencing buoyant activity across all price bands, it is the lower to middle price bracket which is seeing the highest demand for rental property, providing incentive for buy-to-let investors seeking to purchase suitably located properties with the potential for sound monthly income streams.”
According to Pam Golding Properties Research, interestingly the average rental in South Africa during the second quarter of 2016 was R6 570.50 – reflecting a 6.4% increase on the second quarter of last year. Rental inflation rate was therefore unchanged from the first quarter – showing stabilisation after dropping sharply from 7.4% in the final quarter of 2015.
In comparison the average rental in KZN was R6 952 which shows a 6.5% increase from year earlier levels. This is the third highest regional rental in South Africa, after the Northern and Western Cape.
Says Reynolds: “For the investor/landlord areas such as uMhlanga and La Lucia on the North Coast offer good capital appreciation over the long term and stable returns. There is also always demand from tenants for these areas as tenants generally seek secure, complex or apartment living and both these areas offer a lot of sectional title opportunities.
“For example, a one bedroom unit in Gateway that costs R750 000 will fetch a return of R6 000-R7000 per month, which means that the apartment will almost pay for itself. A three bedroom, two bathroom simplex in La Lucia in a secure complex will rent for approximately R20 000 per month (property value being around R3.5 million). On average a unit in uMhlanga will attract approximately an 8% annual return.”
In Pietermaritzburg, gated estates are in demand and pushing rentals up, says Barbara Becker, Pam Golding Properties area principal in the Pietermaritzburg and KZN Midlands areas. “Generally we are still finding that flats, houses and especially security complexes in the north of the city are still attracting higher rentals than the south, following a similar trend to selling prices.
“A good example is the houses being built in the Victoria Country Club Estate which are achieving above R3 million for freestanding houses and renting out between R18 000 and R20 000 per month. The Sheraton flats in the Cascades are still the most sought after for rentals, especially two bedroom flats which can go for R6 000 per month and sell between R700 000 and R800 000. This is due to the fact that these are in close proximity to Greys Hospital which sees an ongoing influx of young doctors coming to complete their internship.”
Pam Golding Properties reports that in the Westville area there is also a strong demand for residential property to rent, with achievable rental returns for free-standing or gated units approximately 10%.
Adds Reynolds: “When renting out property bear in mind that the first step is to enlist the services of a reputable and qualified rental estate agency to obtain advice on the correct amount to charge as a rental, while contracts need to be CPA compliant. It is far better to use an estate agent because there are a lot of legal requirements that govern leases, and hence, without the correct knowledge and information, the landlord may expose him/herself to risk.”
For further information visit www.pamgolding.co.za or contact Pam Golding Properties KZN on 031 2075584.